The Project System (PS) module of SAP is specifically designed to provide comprehensive and fully

integrated project management functionality for SAP customers. A Project is a complex undertaking,
bringing with it huge data of different type.
At the beginning of each project, whether it involves developing a new product, make-to-order
engineering or internal organization, you need to define and set up the structures necessary to manage
your project and incorporate them into your existing organizations and processes. Before you can run a
project in its entirety, you must first describe the project goals precisely and create a structure for the
project activities to be carried out. A clear project structure provides a basis for successful project
planning, monitoring and control.

Organizational Structures in Project System:

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You create and manage your project structure in SAP R/3 Project System, by means of work breakdown
structures and networks.The WBS describes individual phases and functions of a project. Network
contains the individual project tasks and the dependencies between them in the form of activities and
relationships

Some important terms:

Project Definition
Project Definition is general description of the project that you want to manage. It is a framework laid
down for all the objects created within a project. It contains organizational data that is binding for the
entire project.

Work Breakdown Structure (WBS)

WBS is a hierarchical model of the tasks to be performed in the project. It provides overview of the project
and forms basis for the project organization and coordination.It shows work, time and money spent on the

project. You can use it to plan dates & costs and allocate budget. The Work Breakdown Structure can be
displayed according to:

Phase
Function
Object
Individual tasks required to carry out the project is called WBS elements.

Network
The network describes project processing. Thus the Network contains instructions on how to carry out
activities in a specific way, in a specific order and in a specific time period.Main elements of network are
activities and relationships. It forms the basis for planning, analyzing and monitoring time schedules,
costs, & resources.

Activities
Activities are used to plan project staffing, capacity, material, PRTs, and service requirements. When
activities are assigned to WBS elements, detailed view of costs, dates, and capacities at WBS element
could be obtained. Its a task in a network which has a defined start and finish. An activity can be broken
down into activity elements.Three categories of activities in the Project System:

Internal Activities

External Activities

General Cost Activities

Activity element
Activity element is an activity which is subordinate to another activity. Activity elements contain the same
information as activities.Three categories of activity elements in the Project System:

Work elements
External Elements
General Cost Elements

Activity Type
Its a physical measure of activity output of a cost center .e.g. hours, number of units produced, machine
times, production times.

Milestones
Milestones are the events in the project to which particular importance is attached Or which trigger
predefined functions. In general they indicate transition between different departments or phases.
Milestones are assigned to activities and WBS elements:In PS milestones are used to:

Trigger predefined functions in network activities.

Carry out earned value analysis.
Determine dates in billing plan for sales orders.

Relationships
You use relationships to depict chronological and technical dependencies between activities. The
relationship determines the nature of the link between the individual activities. :

FS Relationship : An activity does not start until the preceding activity is completed.
SS Relationship : An activity can not start unless another activity has started.
FF Relationship : An activity can not be completed until another activity has been completed.
SF Relationship : An activity can not be completed until another succeeding activity has stared.

Confirmations
It is a part of network control. It documents the state of processing for the network activities and activity
elements. There are two types of confirmations Partial & Final.Confirmations are used to record:

The
The
The
The

work center where the activity was carried out.

person who carried out this activity.
yield and scrap produced in an activity.
actual values for the duration and dates.

Settlement
As a rule, projects are used to collect and monitor costs, but are not usually the final cost object. For this
reason the costs in atypical project will be settled at the end of the period.To this end, you store
settlement rules in the activity / WBS element requiring settlement. They contain information on
settlement receivers, cost apportionment and control data. Settlement receivers could be cost centers,
G/L accounts. Etc.

Budget
The budget is the approved cost structure for an action or project in a particular period.Budgeting differs
from cost plan in that it is binding. In the approval phase you prescribe your project funds in the form of
budget. It is possible to allocate overall and annual budget in parallel.

Work Centers
Work center represents the resources responsible for executing an activity. In a work center, you can
enter the available capacity and an operating time. You can arrange the work centers in a hierarchy for
capacity evaluation purposes. Internal activities are assigned to work centers (resources) to be
completed.A work center is a physical unit within a company where an activity is performed.

Profit Center
It is subdivision of business organization which is set up for internal management control purposes. Profit
centers divide business up on a management basis. The basic aim of profit center accounting is to present
areas of the business as entities operating independently in the market.
Lots of jargons .let me site an instance of the construction project of a building..
Let say there is a construction company that is going to construct a Multi-Storey building.
The first thing that needs to be created in the system is Project Definition. The entire activity plan for
this project will come under this project definition. Overall budget needs to be estimated, assigned and
get approved for the project. Project timeline needs to be decided. Project could be then subdivided into
separate parts which are actually WBS elements lets say in this e.g. we have 4 main WBS elements:
1.
2.
3.
4.

Land Acquisition
Procurement
Construction
General
To every above WBS, budget and time line need to estimated.
Now to take an example we will drill down two WBS elements namely Land Acquisition and
Construction.
- Land Acquisition could be sub divided into activities as in

Generation of request document for the land.

Soil testing
Approval for construction
Preparation of purchase order of the land
Above 4 activities should be done in sequence. As in second activity will start only after request document
for the land is completed and so on. Hence these activities have FS Relationship between them.
- Now take WBS element Construction.
It could be sub divided in to floor wise tasks. Let say, we have four story building and each floor has 4
flats. So under WBS element Construction we may create separate sub WBS element for each floor.
Each sub WBS element of floor may be divided further into last level of WBS elements one for each flat
on the floor. This way we will havehierarchy of the WBS elements.Finally last level of WBS elements
i.e. WBS elements of the flats will have activities like

1.
2.
3.
4.

Plumbing
Electrical work
Flooring
Painting

5.

Furniture
These activities form the Network.
Let say Plumbing and Electricity work are the external activities as they are given to a outside
contractor. While the other activities are done by company labor so they are internal activities.
Plumbing and Electrical work could be started simultaneously.While flooring needs be done once the
plumbing and Electrical work is complete. Hence they have FS relationship and so on. Now if we talk
about milestones:

1.
2.
3.
4.

First milestone could be purchasing the land

Second could construct the base of the building.
Third could be construct the floors
Fourth could be completion of plumbing and electrical work for all the flats. And so on.
As I have said that Work center represents the resources responsible for executing an activity For the
above activities, work centers could be the company labor required for the construction, labor provided by
the external service center for plumbing and Electricity work. while Profit Centers could be the finally
constructed flats.

Sr
NO

Project
Elements

Examples

Project Def

Constructing the Buiding

Generation of request document for the
land
Soil testing

Approval for construction

WBS

Preparation of purchase order of the land

Plumbing( external Activities)
Electricity work( external Activities)
Flooring (internal activities)

Activities (Under
3rd WBS)

Relationship

Painting (internal activities)

Furniture
Flooring needs be done after the plumbing and
Electricity work. Hence they have FS relationship
First milestone could be purchasing the
land
Second could construct the base of the
building.T
hird could be construct the floors

Milestones

Network

Fourth could be completion of plumbing

and electricity work for all the flats
Plumbing and Electricity installation are to be one
contractor each. Therefore, there exist a network
within on the activities of it under different WBSs.